Northspyre recently had the chance to attend the 2024 Blueprint Conference in Las Vegas, Nevada, alongside real estate investors, innovators, and industry leaders. In addition to offering insights for CRE professionals into how the Northspyre platform can lower costs and boost returns, we also hosted a panel to provide attendants with high-level insights on navigating current market conditions. The panel, titled “Adapting to the New Normal: Navigating the Margin Crisis in CRE Development”, offered a look at what’s driving the current capital environment and how major firms are adapting and succeeding amid shifting conditions.
Here’s a closer look at Northspyre’s participation in the event, including key takeaways and a video from our exclusive panel:
Why Was Northpsyre at Blueprint 2024?
Every year over 3,000 leaders from construction to management to investors gather in Las Vegas, Nevada to attend Blueprint 2024. Thought leadership was stacked with the CRE industries best and brightest – 250+ speakers discussing industry trends in building and proptech. Northspyre sponsored Blueprint’s annual conference to meet with developers and share how our purpose-built, single software solution helps development teams by offering more predictable outcomes on complex projects. Northspyre also hosted a panel on “Adapting to the New Normal: Navigating the Margin Crisis in CRE Development.”
Our team also had the chance to catch some of the other panels at the event. Some of our favorites from the sessions at Blueprint 2024 included Partnering for Growth: Builder Perspectives on Innovation, where three founders shared their perspective on forging partnerships with production builders, Mission Critical: Can Construction Keep Up with Data Center Demand?, which explored how construction methodologies are evolving to meet AI-driven data center demand, and Planet NYC: How the Biggest Developers in NY engage with Tech, on how developers in New York City leverage technology to drive success on projects.
Adapting to the New Normal: Inside the Northspyre Panel on Navigating the Margin Crisis in CRE Development
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Northspyre’s CEO and Founder William Sankey sat down with panel participants at Blueprint 2024 to discuss why a margin crisis has been a major concern in the CRE industry over the last couple of years and how developers can adapt to succeed even amid less-than-ideal conditions.
Jeff Dvorett, President of Midwood Investment & Development, Kabir Seth, Principal of Presidio Bay Ventures, Peter Chavkin, Managing Partner of Biddle Real Estate Ventures, and Stephen Trapp, Executive Vice President Development and Construction of Columbia Property Trust, joined Northspyre CEO William Sankey to offer high-level insights on how to succeed amid a new normal, the emergence of certain asset classes, and the imperative of digital transformation in CRE development.
Dvorett offered initial insight into the factors driving pressure on development margins, from increasing construction costs to inflation to the rise of the cost of land. Dvorett noted the last couple years have created a “perfect storm of pressures” on private industry, especially for developers. He saw rising costs of construction and capital as being two of the main issues causing the margin crisis, with the pandemic grandfathering in an unprecedented escalation in construction costs in particular.
Peter Chavkin weighed in on what might be driving the rapid rise in the cost of land, saying land is not a commodity but a residual. He explained the value of land is tied to the end value of the property, making whatever is left over or residual included in the cost. Land values have escalated because end values on stabilized buildings have risen, meaning much of that value flows to the land.
Kabir Seth added a few thoughts on how Presidio Bay Ventures strategizes about land in a tight market like the Bay Area. Seth noted San Francisco development is subject to interesting dynamics, with the cost of construction and timelines creating value concerns where assets are selling for less than the cost to build them. In order to navigate the situation, Presidio takes on larger-scale long term projects.
Sankey then asked panelists to weigh in on which factors discussed thus far are in and out of developers control. Dvorett noted in the short term some factors are out of control, but in the long term there will be opportunities and growth in markets. He flagged Public-Private partnerships as a potential road forward for developers to tackle market challenges, especially around regulatory or zoning challenges. The other panelists urged developers to stay away from “if” projects and pursue “when” projects, understanding the wants and needs of the project’s communities and central stakeholders.
Peter Chavkin then offered insight into how technology helps developers manage capital and margins more efficiently. Chavkin describes the home building business as one of “picking up pennies,” saying margins are controlled by ensuring every dollar matters. Before using Northspyre, Chavkin had people who had to spend valuable time every month doing tedious preparation for loan draws and equity draws.
“Northspyre’s platform makes it so that instead of five people doing ostensibly white-collar manual labor data entry with no thought to it, one worker can utilize the software features, such as the audit trail, to see an entire chain of data that would have otherwise been lost to a folder,” Chavkin said. He also noted how the platform is boosting efficiency and empowers the firm to leverage human capital to hire smart people to do smart tasks.
Watch our whole panel session and learn more about how modern real estate development software can help your team succeed under any economic conditions:
Book a demo with Northspyre to learn more about how the platform can help your team reduce manual data entry, increase productivity, and maximize your returns from pre-development from project completion.
